[DEBATE] : BHP Billiton to mine nickel in 'protected' Gag Island | asia-pacific-action.org
glparramatta at greenleft.org.au
Sun Jun 22 23:47:44 BST 2008
BHP Billiton to mine nickel in 'protected' Gag Island
*Richard Samuelson, Friends of West Papua (UK)
<http://www.freewestpapua.org/>:* Gag Island, West Papua, was previously
classified as "Protected Forest". Now the Indonesian government has
given Australian mining giant BHP Billiton the right to mine nickel on
the island ... with the potential for huge environmental destruction to
Gag Island and its surrounding coral reefs.
*BHP Billiton expands in Indonesia*
By Lisa Murray in Jakarta
June 17 2008, Financial Times (UK)
BHP Billiton is expanding its activities in Indonesia, signing a joint
venture agreement on Tuesday to develop two nickel mines in partnership
with state-owned company Antam, an investment that could top $4.5bn.
Development of nickel laterite mines on Gag Island, off West Papua, and
North Maluku would be a significant boon for Indonesia’s mining sector
which, despite its vast resources, has languished amid uncertainty about
the introduction of new laws.
Muhammad Lutfi, chairman of the investment coordinating board, said the
two companies planned to build a smelter and could spend more than
$4.5bn on the project.
BHP said it was too early to predict the size of the investment but in a
presentation to investors last Thursday, Marius Kloppers, chief
executive, referred to a $2bn-plus investment in an "eastern Indonesian
facility". "We are entering into conditional agreements with PT Antam to
form a 50:50 alliance to integrate and evaluate two nickel laterite
resources in Eastern Indonesia, " BHP told the Financial Times on Tuesday.
"The agreements are conditional, one such condition being approval by
the board of BHP Billiton. "
The board is expected to make its decision by this time next month. But
BHP has already advertised for a project manager, with applications
closing on Monday.
Tuesday’s agreement breathes new life into BHP’s controversial Gag
Island project, which was suspended in 1999 following an environmental
campaign to protect its forests and surrounding coral reef.
The government reclassified the area as ‘protected forest’. But in 2004,
it changed the regulations to reinstate the rights of BHP and Antam to
The other area for development, Halmahera in the Maluku Islands, hosts
several mining projects but it also poses its own challenges. In 1999
and 2000, thousands of people were killed on the island during clashes
between religious militia groups.
The environmental and conflict risks for BHP may now be outweighed by
the potential rewards as nickel prices have more than doubled in the
past five years.
BHP is also getting back into coal in Indonesia after selling out of the
industry in 2001. Motivated by a tripling in coking coal prices, BHP is
building a mine in East Kalimantan, Borneo and production is expected to
start by the end of this year.
Rio Tinto, the subject of a takeover bid by BHP, is also looking to
develop a large nickel deposit in central Sulawesi. It has been in
negotiations with the Indonesian government over the project for more
than two years.
*Ecological fears over venture*
between BHP and Indonesian miner
20 June 2008
JAKARTA (AFP) — Anglo-Australian giant BHP Billiton and an Indonesian
firm announced Thursday a massive nickel mining partnership that has
environmentalists raising concerns about a protected island paradise.
The 50-50 joint venture between BHP and state-owned Antam in eastern
Indonesia has raised fears for marine life in the rich waters off Gag
Island in West Papua province.
The companies have released few details of the plan, which is subject to
their boards' approvals, but a BHP Billiton spokeswoman in Melbourne
said it related to deposits on Gag and Halmahera Island in North Maluku.
She could not confirm reports that it could lead to the development of a
4.9-billion-dollar nickel smelter. "This is really early days. The
agreement's conditional on approval by the boards of BHP Billiton and
Antam. The BHP Billiton board hasn't yet approved any specific project,"
she told AFP.
Indonesia's Investment Coordinating Board has said the joint venture
will involve the creation of nickel mines and refineries in Maluku and
West Papua valued at 2.5 billion dollars.
The forests of Gag Island, adjacent to the Raja Ampat island group off
the western tip of the Papuan mainland, are technically protected but in
2004 the government allowed exceptions for certain companies to mine there.
The removal of the restrictions came amid reports that BHP was
pressuring Jakarta to drop environmental obstacles to the island's
exploitation. BHP has denied these allegations in the past.
The United Nations' education and scientific agency, UNESCO, has been
considering putting the Raja Ampat and Gag islands on its world heritage
list as the richest area of marine biodiversity on earth.
"Most mining companies have an agreement that you don't mine in world
heritage sites," UNESCO environmental scientist Koen Meyers said. But
because the islands are only nominated for heritage listing the
Indonesian government "has the decision" on mining, he said.
The islands' formal listing as a heritage site had been stalled by
Jakarta's failure to designate them as a national park. "The problem
with Raja Ampat is that it does not have the highest protection status
in the country," Meyers said.
Siti Maimunah, executive director of mining watchdog Jatam, said the
joint venture was a "scandal." "It's a scandal for a company from a
developed country to mine an area with some of the richest biodiversity
in the world," Maimunah said.
"The economy in the region will collapse. Traditional fishing will die
and the locals will lose their land."
Conservation International Indonesia director Jatna Supriatna said
irresponsible large-scale mining could pose a major risk to the entire
ecosystem. "Exploration on Gag Island has started but we hope that
before exploiting the island's rich nickel deposits the companies'
environmental impact analysis is carefully done," he said.
"If they dump their tailing into the sea ... the tailings will impact
the Raja Ampat islands and destroy an area that has been proposed by
UNESCO as a World Heritage Site." He said small-scale illegal mining was
already rampant in the Raja Ampat islands.
The joint venture comes amid a long-term trend of rising nickel prices,
which have doubled in the past five years driven by demand from China
for stainless steel.
Jakarta has been desperate to boost foreign direct investment,
particularly in the mining sector where companies have complained of
confusing regulations and red tape.
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